Gold-Stock Upleg Pauses

By Adam Hamilton – Re-Blogged From Gold Eagle

The gold miners’ stocks have slumped in January, tilting sentiment back to bearish.  This sector’s strong December upward momentum was checked by gold’s own upleg stalling out.  Gold investment demand growth slowed on the blistering stock-market rally.  But uplegs always flow and ebb, and this young gold-stock upleg merely paused.  The gold miners’ gains will likely resume soon, rekindling bullish psychology.

Most investors and analysts track the gold-mining sector with its leading ETF, the GDX VanEck Vectors Gold Miners ETF.  GDX was this sector’s pioneering ETF birthed in May 2006, creating a huge first-mover advantage that is insurmountable.  This week GDX’s net assets of $9.9b were an incredible 56.7x larger than the next-biggest 1x-long major-gold-miners ETF!  GDX dominates this space with little competition.

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Gold Surges On Stock Selloff

By Adam Hamilton – Re-Blogged From Gold Eagle

Gold investment demand reversed sharply higher in recent months, fueling a strong gold rally.  The big stock-market selloff rekindled interest in prudently diversifying stock-heavy portfolios with counter-moving gold.  These mounting investment-capital inflows into gold are likely to persist and intensify.  Both weaker stock markets and higher gold prices will continue to drive more investment demand, growing gold’s upleg.

Early in Q4’18, gold reached a major inflection point.  It languished during the first three quarters of 2018, down 8.5% year-to-date by the end of Q3.  Investors wanted nothing to do with alternative investments with the stock markets powering to new record highs.  The flagship S&P 500 broad-market stock index (SPX) had rallied 9.0% in the first 3/4ths of last year.  That left gold deeply out of favor heading into Q4.

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Companies to Buy Back Fewer Shares

By Thomson Reuters – Re-Blogged From Newsmax

U.S. companies’ shopping spree for their own shares helped put a floor on market declines in 2018. Don’t look for the same level of support in 2019.

Wall Street’s recent volatility has optimists betting that buybacks could provide the market with an even better buffer in 2019. But many strategists see the lift from buybacks – a major factor behind the bull market – losing some force as earnings growth slows while tax policy bonanzas fizzle out.

“Companies bought back around 2.8 percent of shares outstanding in 2018. That was a substantial support to the market and bigger than dividends,” said Jack Ablin, chief investment officer at Cresset Wealth Advisors in Chicago.

case of dollar bills to buy back stock shares

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Beware The Young Bear!

By Adam Hamilton – Re-Blogged From Gold Eagle

Stock markets are forever cyclical, an endless series of alternating bulls and bears. And after one of the greatest bulls in US history, odds are a young bear is now gathering steam. It is being fueled by record Fed tightening, bubble valuations, trade wars, and mounting political turmoil. Bears are dangerous events driving catastrophic losses for buy-and-hold investors. Different strategies are necessary to thrive in them.

This major inflection shift from exceptional secular bull to likely young bear is new. By late September, the flagship US S&P 500 broad-market stock index (SPX) had soared 333.2% higher over 9.54 years in a mighty bull. That ranked as the 2nd-largest and 1st-longest in US stock-market history! At those recent all-time record highs, investors were ecstatic. They euphorically assumed that bull-run would persist for years.

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Has This Become A “Short Everything In Sight” Market?

By John Rubino – Re-Blogged From Dollar Collapse

One of the strangest things about this strangest-ever expansion has been the way pretty much everything went up. Stocks, bonds, real estate, art, oil – some of which have historically negative correlations with others — all rose more-or-less in lock-step. And within asset classes, the big names behaved the same way, rising regardless of their relative valuation.

This seemingly indiscriminate buying created a paradise for index funds that simply accumulate representative assets in their chosen sectors. And it made life a nightmare for the higher-order strategies of hedge funds that get paid to beat the market.

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The Stock Market Economy

By Peter Schiff – Re-Blogged From Euro Pacific Capital

Currently, some market watchers have begun to openly question whether the bull market in stocks has finally come to an end. They certainly have cause to worry. Valuations are frothy after a record run-up in the last few years. Bond yields across the yield curve are rising sharply, as the Fed Funds Rate breaks into territory not seen since before the market crash of 2008. Much higher costs of capital are already putting pressure on rate-sensitive industries such as housing and autos. The boost to earnings provided by the corporate tax cuts will fade and rising prices resulting from past monetary policy and import tariffs may be expected to slow consumption and take a toll on balance sheets. All this points to possible lackluster performance, with stocks essentially flat so far this year.

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Dow Jones’ Earnings Are At Record Highs

By Mark J. Lundeen – Re-Blogged From Gold Eagle

The Dow Jones saw some action this week. Wednesday, the day after the mid-term elections it advanced by 2.13% from its previous day’s closing price, our fourth day of extreme volatility since early October. Everyone was happy about the nice daily gain. But I’m only noting that days of extreme market volatility (Dow Jones 2% days) are in the main bear-market phenomenon, be they negative or positive.

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